Trump threatens EU with trade cut over 'hostile' proposal to make Canada associate member

US President Donald Trump has threatened to cut trade with the EU or impose "very serious tariffs" after the bloc proposed to make Canada its first ever "associate member".

He called the prospect of Canada joining the EU “laughable” and called Canada a “terrible trade partner".

“If it’s a good intention, that’s fine. If it’s a bad intention, we’ll put very heavy tariffs on Europe,” Trump said.

His comments came after the EU Commission president, Ursula von der Leyen announced Canada and the EU would build on their existing free trade agreement, known as CETA, with a broader “Alliance for the Future” aimed at creating “a common prosperity and economic security space".'

The proposal comes as both Canada and the EU look to pivot away from an aggressive US under Trump's presidency.

Speaking in her annual State of the European Union address on Wednesday, von der Leyen cast that closer relationship as rooted not just in trade but in shared democratic values.

“Above all, dear Mark, Europe and Canada believe in democracy,” von der Leyen said to Carney, who received a standing ovation at the European Parliament in Strasbourg, France. He is due to address the Parliament on Thursday.

Trump’s tariffs and repeated talk of making Canada the 51st state have soured the relationship between the North American neighbours.

Canada is seeking to reduce its dependence on the United States, the destination for roughly 70% of its exports, and Prime Minister Mark Carney has called for a “unique alliance” with the EU.